Investing.com -- U.S. crude futures staged a dramatic reversal on Wednesday reversing territory after an unexpected draw in crude stockpiles last week pushed oil prices back near 2016 yearly-highs.
On the New York Mercantile Exchange, WTI crude for June delivery traded in a broad range between $43.97 and $46.34 a barrel before settling at $46.17, up $1.51 or 3.38% on the session. With the sharp gains, U.S. crude futures closed higher for the fifth time in six sessions. The front month contract for WTI crude is approaching $47 a barrel, a level it last hit in early-November.
On the Intercontinental Exchange (ICE), brent crude for July delivery wavered between $44.81 and $47.75, before closing at $47.54, up $2.02 or 4.44% on the day. On April 29, North Sea brent futures reached an intraday high of $48.50 to hit its highest level of the calendar year. Brent futures last eclipsed $50 a barrel in early-October.
Both the international and U.S. benchmarks of crude have gained more than 10% since talks at a closely-watched OPEC and Non-OPEC summit on April 17 collapsed after Saudi Arabia demanded that Iran take part in a coordinated production freeze.
On Wednesday morning, the U.S. Energy Department's Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. commercial crude oil inventories decreased by 3.4 million barrels for the week ending on May 6 from the previous week. At 540.0 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 1.2 million barrels, while distillate fuel inventories decreased by 1.6 million barrels for the week.
The massive draw defied expectations for a strong build after the American Petroleum Institute estimated a weekly increase of 3.45 million barrels on Tuesday evening after the close of trading. The draw represented the first decrease in U.S. crude inventories in six weeks. At the Cushing Oil Hub in Oklahoma, stockpiles rose as expected by 1.52 million barrels. Inventory levels at Cushing, the main delivery point for NYMEX oil, remain dangerously close to reach full storage capacity.
Meanwhile, U.S. production fell by 23,000 to 8.802 million barrels per day touching down to fresh 18-month lows. Domestic output in the U.S. has now declined in 12 consecutive weeks.
Many analysts attributed the draw to the devastating Canadian wildfires, which have closed a bevy of pipelines throughout Western Canada over the last week. On Wednesday, oil sands companies near Fort McMurray began to resume operations, starting with Royal Dutch Shell (LON:RDSa) at the Albian mine, located roughly 50 miles north of the small Alberta town. In total, Canadian officials fear that the storms could be responsible for forcing up to 1.6 million barrels of oil offline.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.50% to an intraday low of 93.65. The index is on pace to halt a six-day winning streak.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
Despite the recent upswing, crude prices are still sharply below their peak of $115 a barrel in June, 2014.
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